Big Problem ahead-intra day post

4/30/08

Here is the day the Fed will be announced the quarter point cut that investors want later afternoon. I am writing this blog at morning and would like to put a guess on what would be the outcome of the rate decision. Most likely, Bernanke will make the quarter point interest rate cut and have statement inflation is moderating and not a problem. However, the long term bond yield chart is telling me a different story. It is forming an inverted Head & Shoulder pattern and if the neckline is broken, it means the inflation keep going up sharply. This would post a big problem ahead for the Fed in coming months on whether it needs to raise the rate instead reduce it to fight off the inflation or not? Then, of course, would post big treat on market to sustain the upward momentum on coming months. The better action probably, no rate cut today and watch carefully ongoing forward to see what is getting worse and react right away to cure inflation pressure or push forward the growth little more. Let see the outcome afternoon.